You need to choose between two machines based on the folowing information: Machine 1 has a 4 year life, costs $322,500 with pre-tax operating costs of $64,500 per year. Machine 2 has a 3 year life, costs $425,250 with pre-tax operating costs of $39,600 per year. Both machines have a salvage value of $22,500 and are classed with a CCA rate of-18% per year. The company tax rate is 30% and the discount- rate is 10%. a) What is the EAC? E b) Which machine would you select as an investment? Answer Place your final answer in the box. 1 a) EAC? b) Which Machine? Show your work here (mandatory) Page Break
You need to choose between two machines based on the folowing information: Machine 1 has a 4 year life, costs $322,500 with pre-tax operating costs of $64,500 per year. Machine 2 has a 3 year life, costs $425,250 with pre-tax operating costs of $39,600 per year. Both machines have a salvage value of $22,500 and are classed with a CCA rate of-18% per year. The company tax rate is 30% and the discount- rate is 10%. a) What is the EAC? E b) Which machine would you select as an investment? Answer Place your final answer in the box. 1 a) EAC? b) Which Machine? Show your work here (mandatory) Page Break
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 2P
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